Taking an education loan is a big step, but many students don’t fully understand all the terms. One important term is the moratorium period. Knowing how it works can help you avoid stress and extra costs later.
What is a Moratorium Period?
The moratorium period is the time when you don’t have to pay EMIs on your education loan.
It usually includes:
- Your course duration, and
- An extra 6 months to 1 year after finishing the course
This is given because students usually don’t earn money while studying.
How Long Does It Last?
The duration depends on your course:
- 2-year course → about 3 years moratorium
- 4-year course → about 5 years moratorium
- Short courses → shorter period
👉 Important: The moratorium starts from the first loan amount given by the bank, not from when you sign the loan papers.
Do You Pay Interest During This Time?
Yes — and this is very important.
Even though you don’t pay EMIs, interest keeps adding to your loan during the moratorium period.
Example:
If you take ₹10 lakh loan, the total amount you repay later can increase a lot because of interest.
💡 Tip: If possible, try to pay only the interest during this time. It will reduce your total burden later.
What Do RBI Rules Say?
The Reserve Bank of India has set guidelines for education loans:
- Banks must give a moratorium period
- Repayment usually lasts 5 to 7 years (can be longer for big loans)
- Banks cannot force recovery during the moratorium period
What Happens After Moratorium Ends?
Once the period is over:
- Your EMI starts
- The EMI is based on loan amount + added interest
Many students feel surprised because the total amount becomes higher than expected.
What If You Can’t Pay EMI?
If you’re not ready to start payments:
- Contact your bank immediately
- Banks may adjust or extend repayment
Missing EMIs without informing the bank can harm your credit score.
Simple Advice for Students & Parents
- Read all loan terms carefully
- Understand how interest is calculated
- Parents (co-borrowers) are also responsible for repayment
- Start planning early for EMI payments
- If possible, pay small amounts during the moratorium
Final Thought
The moratorium period is helpful, but it’s not free time — interest is still growing.
Use this period wisely so that repayment becomes easier later.